Sec. 13.187.  CLASS A UTILITIES: STATEMENT OF INTENT TO CHANGE RATES; HEARING; DETERMINATION OF RATE LEVEL.  (a)  This section applies only to a Class A utility.
(a-1)  A utility may not make changes in its rates except by sending by mail or e-mail a statement of intent to each ratepayer and to the regulatory authority having original jurisdiction at least 35 days before the effective date of the proposed change.  The utility may send the statement of intent to a ratepayer by e-mail only if the ratepayer has agreed to receive communications electronically.  The effective date of the new rates must be the first day of a billing period, and the new rates may not apply to service received before the effective date of the new rates.  The statement of intent must include:
(1)  the information required by the regulatory authority's rules;
(2)  a billing comparison regarding the existing water rate and the new water rate computed for the use of:
(A)  5,000 gallons of water; and
(B)  10,000 gallons of water;
(3)  a billing comparison regarding the existing sewer rate and the new sewer rate computed for the use of 5,000 gallons, unless the utility proposes a flat rate for sewer services; and
(4)  a description of the process by which a ratepayer may intervene in the ratemaking proceeding.
(b)  The utility shall mail, send by e-mail, or deliver a copy of the statement of intent to the Office of Public Utility Counsel, appropriate offices of each affected municipality, and any other affected persons as required by the regulatory authority's rules.
(c)  When the statement of intent is delivered, the utility shall file with the regulatory authority an application to change rates.  The application must include information the regulatory authority requires by rule and any appropriate cost and rate schedules and written testimony supporting the requested rate increase.  If the utility fails to provide within a reasonable time after the application is filed the necessary documentation or other evidence that supports the costs and expenses that are shown in the application, the regulatory authority may disallow the nonsupported costs or expenses.
(d)  Except as provided by Subsections (d-1) and (e), if the application or the statement of intent is not substantially complete or does not comply with the regulatory authority's rules, it may be rejected and the effective date of the rate change may be suspended until a properly completed application is accepted by the regulatory authority and a proper statement of intent is provided.  The utility commission may also suspend the effective date of any rate change if the utility does not have a certificate of public convenience and necessity or a completed application for a certificate or to transfer a certificate pending before the utility commission or if the utility is delinquent in paying the assessment and any applicable penalties or interest required by Section 5.701(n).
(d-1)  After written notice to the utility, a local regulatory authority may suspend the effective date of a rate change for not more than 90 days from the proposed effective date.  If the local regulatory authority does not make a final determination on the proposed rate before the expiration of the suspension period, the proposed rate shall be considered approved.  This approval is subject to the authority of the local regulatory authority thereafter to continue a hearing in progress.
(e)  After written notice to the utility, the utility commission may suspend the effective date of a rate change for not more than 150 days from the proposed effective date.  If the utility commission does not make a final determination on the proposed rate before the expiration of the suspension period, the proposed rate shall be considered approved.  This approval is subject to the authority of the utility commission thereafter to continue a hearing in progress.
(e-1)  The 150-day period described by Subsection (e) shall be extended two days for each day a hearing exceeds 15 days.
(f)  The regulatory authority shall, not later than the 30th day after the effective date of the change, begin a hearing to determine the propriety of the change.  If the regulatory authority is the utility commission, the utility commission may refer the matter to the State Office of Administrative Hearings as provided by utility commission rules.
(g)  A local regulatory authority hearing described by this section may be informal.
(g-1)  If the regulatory authority is the utility commission, the utility commission shall give reasonable notice of the hearing, including notice to the governing body of each affected municipality and county.  The utility commission may delegate to an administrative law judge of the State Office of Administrative Hearings the responsibility and authority to give reasonable notice of the hearing, including notice to the governing body of each affected municipality and county.  The utility is not required to provide a formal answer or file any other formal pleading in response to the notice, and the absence of an answer does not affect an order for a hearing.
(h)  If, after hearing, the regulatory authority finds the rates currently being charged or those proposed to be charged are unreasonable or in violation of law, the regulatory authority shall determine the rates to be charged by the utility and shall fix the rates by order served on the utility.
(i)  A utility may put a changed rate into effect throughout the area in which the utility sought to change its rates, including an area over which the utility commission is exercising appellate or original jurisdiction, by filing a bond with the utility commission if the suspension period has been extended under Subsection (e-1) and the utility commission fails to make a final determination before the 151st day after the date the rate change would otherwise be effective.
(j)  The bonded rate may not exceed the proposed rate.  The bond must be payable to the utility commission in an amount, in a form, and with a surety approved by the utility commission and conditioned on refund.
(k)  Unless otherwise agreed to by the parties to the rate proceeding, the utility shall refund or credit against future bills:
(1)  all sums collected under the bonded rates in excess of the rate finally ordered; and
(2)  interest on those sums at the current interest rate as determined by the regulatory authority.
(l)  At any time during the pendency of the rate proceeding the regulatory authority may fix interim rates to remain in effect during the applicable suspension period under Subsection (d-1) or Subsections (e) and (e-1) or until a final determination is made on the proposed rate.  If the regulatory authority does not establish interim rates, the rates in effect when the application described by Subsection (c) was filed continue in effect during the suspension period.
(m)  If the regulatory authority sets a final rate that is higher than the interim rate, the utility shall be allowed to collect the difference between the interim rate and final rate unless otherwise agreed to by the parties to the rate proceeding.
(n)  For good cause shown, the regulatory authority may at any time during the proceeding require the utility to refund money collected under a proposed rate before the rate was suspended or an interim rate was established to the extent the proposed rate exceeds the existing rate or the interim rate.
(o)  If a regulatory authority other than the utility commission establishes interim rates or bonded rates, the regulatory authority must make a final determination on the rates not later than the first anniversary of the effective date of the interim rates or bonded rates or the rates are automatically approved as requested by the utility.
(p)  Except to implement a rate adjustment provision approved by the regulatory authority by rule or ordinance, as applicable, or to adjust the rates of a newly acquired utility system, a utility or two or more utilities under common control and ownership may not file a statement of intent to increase its rates more than once in a 12-month period, unless the regulatory authority determines that a financial hardship exists.  If the regulatory authority requires the utility to deliver a corrected statement of intent, the utility is not considered to be in violation of the 12-month filing requirement.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1, 1985.  Amended by Acts 1987, 70th Leg., ch. 539, Sec. 11, eff. Sept. 1, 1987;  Acts 1989, 71st Leg., ch. 567, Sec. 20, eff. Sept. 1, 1989;  Acts 1991, 72nd Leg., ch. 678, Sec. 5, eff. Sept. 1, 1991;  Acts 1991, 72nd Leg., 1st C.S., ch. 3, Sec. 4.03, eff. Sept. 1, 1991;  Acts 1993, 73rd Leg., ch. 402, Sec. 1, eff. Aug. 30, 1993;  Acts 1995, 74th Leg., ch. 400, Sec. 4, eff. Sept. 1, 1995;  Acts 2001, 77th Leg., ch. 965, Sec. 3.10, eff. Sept. 1, 2001;  Acts 2001, 77th Leg., ch. 966, Sec. 10.06, eff. Sept. 1, 2001.
Amended by: 
Acts 2005, 79th Leg., Ch. 1106 (H.B. 2301), Sec. 1, eff. September 1, 2005.
Acts 2011, 82nd Leg., R.S., Ch. 1021 (H.B. 2694), Sec. 9.02, eff. September 1, 2011.
Acts 2011, 82nd Leg., R.S., Ch. 1163 (H.B. 2702), Sec. 180, eff. September 1, 2011.
Acts 2013, 83rd Leg., R.S., Ch. 170 (H.B. 1600), Sec. 2.39, eff. September 1, 2013.
Acts 2013, 83rd Leg., R.S., Ch. 171 (S.B. 567), Sec. 39, eff. September 1, 2013.
Acts 2015, 84th Leg., R.S., Ch. 853 (S.B. 1148), Sec. 5, eff. September 1, 2015.
Acts 2019, 86th Leg., R.S., Ch. 967 (S.B. 700), Sec. 5, eff. September 1, 2019.